The Aggregated Extremes Effect: Not All Routes to “Balanced” Bundles are Equally Appealing

Prior research establishes that consumers are averse to extreme options, but what does a “moderate” option look like in the context of choices among bundles of items, such as investment portfolios or product assortment packs? We propose that for bundles, two paths to creating risk and reward balance exist: a “bundle‐of‐pure‐moderation” with all moderate‐risk–moderate‐reward (moderate RR) components and a “bundle‐of‐extremes,” composed of equal numbers of extreme high‐risk–high‐reward (high RR) and low‐risk–low‐reward (low RR) components. We show that consumers have stronger preference for the balanced bundle when composed of a bundle‐of‐extremes rather than a bundle‐of‐pure‐moderation, even when equated on expected value, a phenomenon we term “the aggregated extremes effect.” This effect occurs across different choice set configurations and across multiple domains. Additionally, this effect is eliminated among consumers who view the high RR and low RR components as incompatible, as this undermines the perceived attractiveness of the bundle‐of‐extremes. Finally, this effect is also eliminated by exposing consumers to a depiction of potential outcomes, such that consumers can better perceive the risk reduction upside of a bundle‐of‐pure‐moderation.